Nfts
South Korea will consider NFTs as virtual assets
South Korea’s Financial Services Commission (FSC) will review NFTs as virtual assets from July 19. NFTs used for payments and exchanges will be recognized and may earn interest when deposited into exchanges. The news clarifies the situation of NFTs in the FSC guidelines published last year.
Governments and national authorities around the world are working to integrate the world of crypto into their financial systems. Many are developing new regulations, while others are revising existing ones. A recent example is South Korea’s FSC, the country’s financial institution that oversees its economic activities and issues new regulations.
Last year, the FSC developed guidelines to enable the evolution of the cryptocurrency market. These guidelines also include considerations of NFTs as securities. For this, there are strict rules that NFT issuers must follow, in accordance with the Financial Investment Services and Capital Markets Act. NFTs that do not qualify as securities will fall under the category of “digital assets”.
Digital assets were a feature of the guidelines, allowing users to deposit them into exchanges and receive interest. NFTs and central bank digital currencies (CBCDs) were initially excluded from consideration as digital assets.
This year’s update, released on June 10, brings NFTs into South Korea’s regulated digital asset category. However, this will be done through a case-by-case review. The regulator will analyze NFTs based on the following criteria: whether the tokens are available in abundance, whether they are divisible, and whether they can be used as a method of payment or exchange. Characteristics that discredit their acceptance as a digital asset by the FSC include lack of transferability or payment utility and having very specialized use cases.
The regulations come into force on July 19. The consequences of their implementation may lead to an increase in the prices of NFTs, thanks to their new regulated status. Future developments will make this known to South Korean NFT enthusiasts.